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The deficit of the pension scheme, the budget burden for its financing is halved

2024-10-28 13:32:35Biznes SHKRUAR NGA REDAKSIA VOX

The deficit of the pension scheme, the budget burden for its financing is halved

Budgetary expenditures for the financing of the public pension scheme marked the lowest level in the 9th month of 2024 at least since 2012, according to official data from the Ministry of Finance.

The public scheme pays more for pensions than it collects in social security payments from current employees.

The difference is a deficit that is covered by the budget, that is, by taxes and other taxes paid by citizens and businesses. This difference, instead of widening due to the increasing number of pensioners due to the aging of the population, is decreasing.

At the end of the 9th month of 2024, the deficit of the pension scheme reached a value of 29.1 billion lek, the lowest at least since 2012. The government is spending less money to finance the pension scheme at a time when budget revenues in value have grown at double-digit rates in recent years.

According to data from the Ministry of Finance, from 2014 to 2024, budget revenues increased by 98 percent, while the deficit of the pension scheme in the same period decreased by 10%. This means, that the weight of pension expenses covered by the state budget is much lower than 10 years ago.

For example, in 2014, the budget collected a total of 266.7 billion ALL in revenue and 12.2 percent of it was used to finance the deficit of the pension scheme, while in the 9th month of 2024, the government used only 5.5% of the revenue to finance the deficit of the scheme .

This situation is in favor of the government, but against the pensioners, mainly for two main reasons. First, income from insurance contributions has improved due to salary increases in both the private and public sectors at a faster pace after the Covid-19 pandemic. The increase of the minimum wage by about 30 percent in the span of one year starting in 2022 positively affected the income from contributions.

On the other hand, expenses for pension payments did not increase according to forecasts. Pensioners who retired in recent years do not meet the criteria for full payments. Consequently, most pensioners benefit from social or partial pension.

The loss of documentation of working years and working in the black for the last 30 years have meant that the majority of those currently retiring do not meet the criterion for working years of about 39 years with insurance to receive a pension complete.

On the one hand, there is an increase in expenses less than the forecasts, and on the other hand, the increase in receipts from contributions more than expected has reduced the burden on the budget for pensions.

At the beginning of this year, the government took back more than 7 billion lek from the deficit savings of the scheme and took them for infrastructure investments through a normative act for the amendment of the 2024 budget. Meanwhile, the majority of Albanian pensioners receive monthly payments below the relative poverty level 6.7 USD per day determined by the World Bank.


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